25. Net impairment losses on non-financial assets

Impairment losses in respect of cash generating units first and foremost reduce the goodwill attributable to those cash generating units (groups of units), and then they reduce proportionally the carrying amounts of other assets in the unit (group of units). An impairment loss in respect of goodwill is not reversed. In the case of other assets, an impairment loss may be reversed if the estimations used to determine the recoverable amount have changed. An impairment loss may be reversed only to the extent that the carrying amount of an asset does not exceed the carrying amount – less depreciation/amortization – which would be determined had the impairment loss not been recorded.

If there are indications of impairment of common assets, i.e. assets that do not generate cash flows independently from other assets or groups of assets, and the recoverable amount of a single common asset cannot be established, the Group determines the recoverable amount at the level of the cash-generating unit to which a given asset belongs.

At the end of each reporting period the Group assesses whether there are any indications of impairment of any non- financial non-current assets, right-of-use assets (or cash-generating units).

Indications of impairment of non-current assets include:

1. the asset’s market value has declined during the assessment period significantly more than would be expected as a result of the passage of time or normal use;
2. the occurrence of adverse changes (which has already occurred or will occur during the period) caused by technological, market, economic or legal factors in the Bank’s environment or on the markets to which the asset is addressed;
3. an increase in market interest rates (which has occurred or will occur in the period), which is likely to affect a discount rate used to calculate the value in use of a given asset and reduce its recoverable value significantly;
4. evidence is available of obsolescence (an asset becoming unfit for use) or physical damage of an asset;
5. significant adverse changes have taken place during the period (or are likely to take place in the near future), in the extent to which, or manner in which, an asset is used, e.g. plans to discontinue or restructure the operation to which an asset belongs, plans to dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite;
6. evidence that the economic performance of a given asset is or will be in the future worse than expected;
7. the occurrence of adverse climate change which will contribute to a change in the expectations as to the further use of a given asset;
8. other indications of possible impairment.

If any such indications occur and annually in the case of intangible assets which are not amortized, as well as intangible assets not yet placed in service and goodwill, the Bank estimates the recoverable amount being the higher of the fair value less costs to sell or the value in use of a non-current asset (or a cash-generating unit), and, if the carrying amount of an asset exceeds its recoverable amount, the Group recognizes an impairment loss in the income statement. In order to estimate these amounts it is necessary to adopt assumptions concerning, among other things, the projected future cash flows that the Group may obtain from further use or sale of a given non-current asset (or a cash-generating unit). Adopting different assumptions concerning the valuation of future cash flows could affect the carrying amount of certain non-current assets.

• „Intangible assets,
• „Property, plant and equipment”,
• „Assets held for sale,
• „Investments in associates and joint ventures”,
• „Other assets”.